As2 inventories

Standard cost method:

Under this methods, if you have inventory which is homogenous in nature and the price fluctuation and other cost related to Inventory does not change significantly or there are significant amount of intercompany transactions (between various companies in the group), you can book your inventory at a standard cost (which has to computed at the beginning of a period, the policy for the same should be stated clearly) and at the time of actual purchase the difference between Standard Price and actual cost is booked into various "Variance accounts" and inventory is carried at standard cost. 

At The end of the reporting period the variance amount is loaded back to Inventory value based on the method of Inventory valuation followed by the Group.

Could be! Im womdering how it would be like if variance adverse or favourable amounts are added or taken out of closing inventory. Beside, only price variance is inclusive. Atleast, @ CAGanesh told something unique that google doesnt teach us. Standard costimg example is given in various ways.